More on liquidity (or lack thereof) in the world's credit markets: Aegis Mortgage Corp. filed for bankruptcy in the US, and Countrywide's stock closed today at $26.61, a loss of nearly 4.5% in a day. In aftermarket trading, it continues to fall.
On the other side of our interactive globe, the fallout from tightening liquidity has negatively affected Australia's RAMs Home Loan Group, a mortgage lender with the bad timing and worse luck to have been listed on the Australian Stock Exchange for the first time on July 27th. Its stock fell 27% today, and 49% since it was listed. Consider that it has no investments in the American subprime markets, and that its entire portfolio (about $12 billion US in loans) has 100% mortgage insurance. Why are investors running scared of financial stocks? When uncertainty exists, as it does in the credit markets right now, it's human nature to retreat with the rest of the herd. As the retreat slows, though, the rear guard may turn again. Countrywide's stock may begin to firm up, and by tomorrow's opening bell, be perceived as a bargain.
When I was developing real estate in a previous life, I had as an attorney a holocaust survivor who could not tolerate indecision. Julius Robinson would point his finger in the air and thunder: "Possibilities are endless. Probabilities are a much smaller set [of numbers.] Make a decision and get moving!"
Mike,
I am really enjoying your blog. Keep up the good work!
David Porter, I'm honored to have you visit and comment. I'm a raving fan of your blog, and it's a pleasure to hear from you. AR Lenders, please click this link to check out David Porter's blog. I think you'll find him to be a valuable resource.
Hi Mike.......wow! Very positive ending to your post. I was going to ask you - so? What do you think? Any more good info?
Teri, thanks for visiting and commenting. Countrywide's stock continues to slide. It fell again today, to within 61 cents of its 52 week low according to one story, and to the lowest level since January 2004 according to another. That's the gloomy news. If you hold CFC stock, however, here's a brighter note, although buried down five paragraphs in the article: new mortgage applications for July 2007 (CW) are up 5% over the same period in 2006. Stay tuned.
Mike
I see an opportunity to buy some stock on the open market at a significant discount....of course, it will be a buy and hold strategy, not something I'd try to flip (hmm, like real estate that burned so many). If it works, great, my thought process was right. If it doesn't, I have no one to run to that will help me recover my losses.
Either way, thanks for putting great content for all of us to read and enjoy!
Bill, I wish you Godspeed on Countrywide stock if you buy it. It was $45. in February, and closed today under $19. I don't think it's ride south is over. Thanks for visiting and commenting.